The 153 members of the WTO agree on two things — we’re in a hole and we must keep digging.
The hole is the Doha Development Round, a decade-old negotiation that was billed as the next stage of trade liberalization after the creation of the WTO. After repeated failures to clinch a deal, Doha is on life-support, but nobody is prepared to kill it off.
“There is a Russian proverb that says: ‘Don’t chop off the branch you are sitting on,’” WTO Director-General Pascal Lamy told trade ministers, defending the body at its biennial conference in Geneva last Saturday.
The ministers had collectively acknowledged that the Doha round was unlikely to be concluded in the near future, but promised to keep working toward it, despite a gulf in opinions — especially between the US and China — that makes it almost unthinkable that the WTO could reach a consensus.
Trade diplomats like to point out that the WTO is more than Doha alone, and that a failure to complete Doha does not mean the end of the WTO, since the body also monitors world trade and arbitrates disputes brought to it by member states, but with so much negotiating capital already tied up in Doha, every new proposal to modernize WTO rules is seen part of a wider wrangle over the trade round, paralyzing discussion.
If the WTO does not keep the world’s trade rulebook up to date, it risks losing its position as the global arbiter. Recent allegations of protectionism, such as currency manipulation and environmental taxes, are outside WTO rules, or at best a gray area.
Lamy has blamed the paralysis on a “crisis of multilateralism” — a failure of diplomacy that has also hobbled negotiations on the eurozone crisis and global climate talks.
“The international system can’t be in good shape, because the members of the international system are in bad shape,” he said at a briefing two weeks before the Geneva conference. “They’ve got very little energy left for international compromise.”
Doha was originally meant to help developing economies, but that idea looks out of date now that India, Brazil and most of all China have grown into trading superpowers. For that reason, some officials say Doha, launched at the same time that China was accepted into the WTO, was doomed from the start.
Equally, that helps explain why China, India and Brazil are its most vocal champions, determined not to let any new ideas gain traction unless there is a payoff.
“There’s no question of redefining Doha,” Brazilian Foreign Minister Antonio Patriota said on the eve of the Geneva conference. “We agreed on its mandate 10 years ago.”
In short, Doha and arguments about Doha are using up all the WTO’s oxygen and, as a result, it has been largely unable to evolve for a decade.
That is not to say global trade governance is not changing at all — the WTO’s ministerial conference notched up two big successes, but both, in their own way, compound the problem.
One was the decision to grant Russia membership after 18 years of talks, so that at last all the big economies will be inside the club.
The other was a long-awaited reform of the Government Procurement Agreement (GPA), which will open US$100 billion of government contracts to foreign competition every year.
Russia has promised to play a positive role once it joins midway through next year and it may not even get into Doha negotiations, but having another big and opinionated player at the table will not make it any easier to reach consensus.